19 September 2012

A partnership between First Shine
Properties and Meadows Bright Development has placed the top bid for a
99-year-leasehold private housing site on Dairy Farm Road.

Their bid of nearly $244.32 million
works out to $616 per sq ft per plot ratio (psf ppr), ahead of earlier market
expectations since the launch of the site in July.

The top bid was 9.9 per cent higher
than the next highest bid of $560.49 psf ppr from UOL Group unit Secure
Development. The tender attracted nine bids in all, with the lowest from a
partnership between Capital Development and ZACD Investments at just under $420
psf ppr.

Based on the top bid, property
consultants' estimates of the breakeven cost for a new condo project range from
$950 to $1,100 psf, and the likely average selling price at $1,200 to $1,300
psf.

The 188,861.2-sq-ft site on Dairy
Farm Road has a maximum gross floor area (GFA) of 396,617.4 sq ft and a maximum
building height of part five storeys and part 15 storeys, subject to 140 m
above mean sea level.

The Urban Redevelopment Authority introduced
a development control guideline which stipulates that the maximum number of
units in non-landed private housing projects outside the central area will be
capped based on an average area of 70 sq m. Going by the formula, the Dairy
Farm Road site can be developed into no more than 526 units.

Property consultants noted that the
top bid was 3.5 per cent lower than the $638 psf ppr that the nearby Hillview
Avenue site fetched in March.

An analyst said the lower psf ppr
price for the latest plot could have been influenced by the new guideline.

However, DWG's senior manager Lee Sze
Teck said the top bid was above market expectations and that the nine bids
received reflected enthusiastic participation on account of the site's
attractiveness.

"This could mean that the
government's guidelines have limited impact on the market as developers can
find innovative ways to comply with it - such as by selling more loft space,
more private enclosed space or a roof terrace - and yet maintain their
profits." He added that the wide disparity in terms of a nearly 47 per
cent gap between the top and lowest bids at the tender could be due to
developers grappling with the new guidelines.

Another analyst said:
"Residential sites in the Bukit Timah area released under the Government
Land Sales Programme in the past two years have attracted many bidders, so it's
not surprising to find nine parties vying for this site. This is partly due to
the attraction of the Bukit Timah address, as well as there being relatively
fewer projects in this area than, say, in the east and north-east."

Grade A office space in Singapore is
50 per cent cheaper than Hong Kong and 70 per cent cheaper than Tokyo.

Mr Tharman said: "We'll make
sure that this is a source of competitiveness for Singapore having premium
Grade A office space and ample supply and at the right price. Our cost is still
competitive if you compare Singapore today with other leading centres - say we
take Hong Kong or Tokyo, we are still significantly cheaper."

A sale could be in the offing for the
landmark Mandarin Orchard Singapore and the adjoining Mandarin Gallery which
were valued at $1.18 billion and $520 million at the end of last year.

Owner Overseas Union Enterprise (OUE)
is said to have been receiving interest from potential buyers particularly for
the hotel for some time now and has maintained that it will sell the property
if it receives a price too good to refuse.

Now, market talk is that OUE has
given exclusivity to a potential buyer to perform due diligence. Some sources
point to a US property fund manager - possibly Pramerica - teaming up with a
Middle Eastern player, which some suggest could be Abu Dhabi Investment
Authority.

Mandarin Orchard's $1.18 billion
valuation in OUE's books works out to around $1.12 million per key for the
1,051-room property. If a transaction materialises at this price or higher, it
would be a record for the Singapore hotel market.

While the hotel has been achieving
strong cash flow aided by Singapore's tourism boom, analysts note that both the
hotel and Mandarin Gallery are on a site with a remaining lease term of about
44 years. The reversionary interest in the land is held by Ngee Ann Kongsi.

The hotel comprises two towers of 37
and 39 storeys. Last year, it achieved an average room rate of about $277.

Mandarin Gallery - completed in late
2009 and boasting a 152-metre long frontage on Orchard Road - has a gross floor
area of 196,337 sq ft.

A freehold industrial building at 14
Little Road, has been put up for sale with an indicative price of $32 million,
or $513 per sq ft per plot ratio.

The existing development, Tropical
Industrial Building, is located off Upper Paya Lebar Road. The eight-storey
building has parking spaces for 20 cars in the basement.

It comprises eight strata-titled
units with total strata floor area of some 50,289 sq ft and total gross floor
area (GFA) of 62,375 sq ft.

Although the building sits on a land
area of some 22,126 sq ft, with plot ratio of 2.5, no development charge is
payable if a developer chooses to redevelop the site to its full potential of
62,375 sq ft (GFA).

The subject site is situated close to
private and public housing estates and eateries are readily available at the
shophouses at the junction of Upper Paya Lebar Road and Little Road.

Exorbitantly high selling prices,
stringent banking rules and a generally cautious sentiment that have been
having an impact on the Malaysian property market this year could continue into
2013.

Malaysian Institute of Estate Agents
(MIEA) deputy president Siva Shanker said that property transactions in the
first half of 2012 had slowed down, adding that this trend showed no signs of
abating any time soon, according to a report in Monday's StarBiz.

Mr Siva said that transactions had
been affected because there was a disparity between the asking price of the
property and the actual price listed on the valuation report.

"We don't think 2013 is going to
be much different, but we don't see the Malaysian property market crashing and
burning like during the US subprime crisis. What we see is things slowing down,
prices will stagnate a bit and not move up so much. In some cases, it won't
move up at all,” he said.

Prices of new homes in China rose for
a third straight month in August from the previous month but in fewer cities
than in July, following government efforts to close loopholes in property
tightening measures.

Average home prices in 70 Chinese cities
rose last month as developers boosted sales to first-time buyers and upgraders,
extending an upward trend that emerged in June after eight months of decline,
data derived from the National Bureau of Statistics (NBS) showed Tuesday.

Calculations by Dow Jones showed
prices in the 70 cities increased by 0.05 per cent on average in August from a
month earlier, compared with a 0.13 per cent increase in July and a 0.02 per
cent increase in June.

The figures come on the heels of
improving housing starts and show a bright spot in a generally weakening
economy. This poses a challenge for Beijing, which is trying to prop up its
flagging economy and at the same time diminish the threat of resurgence of
unsustainably high housing prices.

Prices of new homes in 36 of the 70
large and medium cities surveyed by the NBS rose in August compared with the
previous month, down from 50 cities in July. Compared with a year earlier,
prices of newly built homes fell in 53 of the 70 cities in August, fewer than
July's 58 cities.